How will the outcome of the General Election impact the Cambridge lettings market?
Anton Frost, partner at Carter Jonas, offers an expert view.
The Cambridge lettings market, while maintaining its underlying resilience and appeal, has not been without its challenges this year. It may have come as little to no surprise when it was announced last month that we face yet another delay in departing from the European Union – and if that wasn’t shaking market confidence enough, we are now having to endure a general election first.
The idea of a no-deal Brexit has always been a very real possibility and is something that has been an ongoing concern for those active in both the market. That said, our pending departure has somewhat taken a back seat as we face the hurdle that is the General Election ahead of Christmas.
With just three weeks to go until a new government is formed – or a hung parliament is announced – single landlords are feeling especially uncertain as to what the future holds for them. Contextually, small-scale landlords are already navigating legislation that has been detrimental to the financial viability of their investments – the buy-to-let stamp duty and mortgage interest relief changes being the key driving forces.
This is less of a deterrent for institutional landlords, who often purchase units in bulk at a discounted rate, increasing the chances of a healthier profit from the outset. Commitments and policies on housing are yet to be announced by the major players – and there’s no telling what’s being prepared behind closed doors – but alleviating some of the legislative pressures felt by single landlords now is what will significantly benefit tenants in future, restoring the imbalances between supply and demand.
The government needs to understand the chain reaction that such policies have on the market. Landlords have been steadily retreating over the last two years, which has led to less stock, higher competition and increased rents. By improving the accessibility of the buy-to-let market to single landlords, supply will be allowed the chance to catch up with demand, and the lettings market will be generally more affordable for tenants.
Buy-to-let stamp duty reform or any significant changes to mortgage interest relief is, at this moment in time, wishful thinking. The last general election was a very close call – and it will be no exception when we take to the polls on December 12. So, while we could favour one party’s policies over another, the reforms that could actually be implemented in 2020 remain a mystery.
All that said, market performance in Cambridge has been strong with landlords achieving yields of up to five per cent – in part thanks to the number of quality tenants seeking properties in the area. We expect landlords that do invest to choose Cambridge for this very reason, which we expect in turn will deliver more housing options for tenants.
Above all, regardless of wider political circumstances, the Cambridge lettings market has historically enjoyed an uplift in January and so anyone looking to invest, let out or rent in the new year can expect a bigger buzz of activity.
Anyone concerned about what current and future market conditions could mean to them should seek advice from a credible agent who can guide them through the process and possible outcomes. To discuss further, contact Anton Frost at Carter Jonas on 01223 403330.